Blackstone Inc. Quarterly Report for Q1 Ended Mar 31, 2018

Summary

Blackstone Inc. (BX) reported its first quarter 2018 financial results, showing a decrease in total revenues to $1.77 billion from $1.91 billion in the prior year's first quarter. This decline was primarily driven by a significant drop in Investment Income, largely due to lower performance in Real Estate, Credit, and Hedge Fund Solutions segments, coupled with a decrease in Incentive Fees. However, Management and Advisory Fees, Net, saw a notable increase, particularly in the Credit and Real Estate segments, driven by new fund launches and asset growth. Expenses also rose, primarily due to increased compensation driven by higher management fees, though Incentive Fee Compensation decreased in line with lower incentive fees. Despite the revenue decline, Blackstone's operational segments demonstrated varied performance. Private Equity revenues grew due to strong Performance Revenues from Strategic Partners and Tactical Opportunities, while Real Estate revenues decreased mainly due to lower Performance Revenues. The Hedge Fund Solutions segment experienced a revenue decline driven by lower Performance Revenues and Principal Investment Income, while the Credit segment's revenues fell due to reduced Performance Revenues, although Management Fees saw an increase. The company ended the quarter with $27.9 billion in total assets and $13.3 billion in total partners' capital, reflecting continued strategic capital deployment and management across its diverse business lines.

Key Highlights

• 1Total Revenues decreased by 7.6% to $1.77 billion, primarily due to a 12% decrease in Investment Income and a 73% decrease in Incentive Fees, partially offset by a 13% increase in Management and Advisory Fees, Net.
• 2Net Income Attributable to The Blackstone Group L.P. decreased by 19% to $367.9 million, or $0.53 per diluted common unit, compared to $0.68 per diluted common unit in the prior year.
• 3Total Assets Under Management increased by 3.8% to $449.6 billion, driven by inflows across all segments and market appreciation, partially offset by realizations and outflows.
• 4Fee-Earning Assets Under Management increased by 2.8% to $344.7 billion, reflecting inflows and market appreciation, particularly in Credit and Hedge Fund Solutions.
• 5The Private Equity segment saw an increase in revenues, primarily due to higher Performance Revenues from Strategic Partners and Tactical Opportunities, despite a decrease in Principal Investment Income.
• 6The Real Estate segment experienced a revenue decline driven by lower Performance Revenues, although Total Management Fees, Net, increased due to growth in core+ real estate funds.
• 7Blackstone announced a new unit repurchase program of up to $1.0 billion, adding to the remaining authorization under its prior program.

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